Academics pray for higher prices – not exactly as illustrated

Academics pray for higher prices – not exactly as illustrated

(December 21, 2016)  Today is the shortest day of the year and as is traditional on the winter solstice farmers will be looking forward to longer days and spring planting.  Most will celebrate the season with family and friends.

Unlike the sun which we can expect to stop hovering close to the horizon, the port price of wheat has been stubbornly flat for most of the season according to Ag Canada’s weekly survey of port prices for various grains.

So on this shortest day of the year a typical prairie farmer can expect to take home $23,902.97 or a little over $7 dollars a bushel after deductions for a typical producer car of #1 wheat.  Taking off the cost of inland elevation and cleaning, the farmer ought to be getting $6.50 a bushel at a minimum.*

So how is it that most farmers are only getting a meager $5 or so for their wheat?  In spite of misleading prognostications by some compliant academics, we know the missing $1.50 (about five thousand dollars a grain car) is being taken by the private grain trade – money the single desk Canadian Wheat Board faithfully returned to farmers that is now going to foreign shareholders.

At solstice celebrations throughout history there have been elaborate ceremonies, feasts, and bonfires to encourage the sun to come back.  This year a similar ritual has been repeatedly performed as academics and others make pronouncements on how grain prices will come back if a bonfire of farmers’ money is lit to placate the gods of grain handling and transportation.

Tomorrow I will look at why prairie farmers might be better served by the return of a single desk wheat board, rather than placing their faith in foreign corporations building more grain handling capacity to bring back grain prices.

* For those wondering, the actual numbers for a producer car from Alberta were:

#1 CWRS 13.5% protein
cumulative average
price FOB Vancouver:               $309.29 (Ag Can indicator price – 16 Dec 2016)
Rail Freight:                                  $33.50
Terminal Cleaning:                         $6.81
Other fees and dedications:         $11.95

NET:  $257.03 ($7.03/bushel)



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